Ex-RBS Trader in U.K. Probe Said to Be JPMorgan’s Usher

The offices of JPMorgan Chase & Co. stand in the Canary Wharf business and shopping district in London. Photographer: Simon Dawson/Bloomberg

Oct. 15 (Bloomberg) -- Richard Usher, JPMorgan Chase &
Co.’s chief dealer in London, wrote instant messages while he
was at Royal Bank of Scotland Group Plc that U.K. regulators are
scrutinizing as part of their investigation of alleged currency
manipulation, two people with knowledge of the matter said.

The messages to traders at other firms included details of
his trading positions, said one of the people, who asked not to
be identified because they weren’t authorized to speak publicly.
The spot currency trader left Edinburgh-based RBS in 2010, and
his departure was unrelated to the probe, the person said. The
regulator’s review doesn’t imply wrongdoing on Usher’s part, the
other person said. The people didn’t say how many other traders’
communications are being scrutinized.

Authorities are scrutinizing electronic messages used by
currency traders as part of an investigation of potential
manipulation of the $5.3 trillion-a-day foreign-exchange market,
according to a person with knowledge of the talks. The U.K.’s
Financial Conduct Authority is focusing on trading around the
so-called WM/Reuters rates, benchmarks used to value trillions
of dollars of investments, the person said.

Bloomberg News reported in June that traders at some banks
may have pooled information about their positions through
instant messages and sought to manipulate the WM/Reuters rates
for profit by pushing through trades before and during the 60-second windows when the benchmarks are set. RBS, Britain’s
biggest publicly owned lender, opened an internal inquiry and
uncovered the transcripts after the report, one of the people
said.

Switching Firms

Usher joined JPMorgan in August 2010, according to the
FCA’s register of approved persons. His departure from RBS came
before regulators began probing foreign exchange markets and was
unrelated to the messages, the person said. He is still shown as
an active employee of JPMorgan on the FCA’s register.

Calls to Usher’s work telephone were directed to JPMorgan’s
press department and he didn’t reply to e-mails seeking comment.
He couldn’t be located through Internet searches or directory
assistance. Spokesmen for JPMorgan, RBS and the FCA in London
declined to comment.

Usher was a member of the Bank of England’s 27-member
Foreign Exchange Joint Standing Committee chief dealers’
subgroup as of December, according to the central bank’s
quarterly bulletin for the three months ended in June.

Justice Department

Authorities around the world are investigating the alleged
abuse of financial benchmarks by companies that play a central
role in setting them. RBS and Zurich-based UBS AG, Switzerland’s
largest bank, were among four firms already fined about $2.6
billion for rigging the London interbank offered rate, the
benchmark for more than $300 trillion of securities worldwide.

The Commodity Futures Trading Commission is going over 1
million e-mails and taped phone calls as investigators look into
whether ISDAfix, a benchmark in the $379 trillion market for
interest-rate swaps, was manipulated, a person familiar with the
matter said earlier this year. European regulators also are
reviewing allegations of collusion in crude oil and biofuels
markets.

Separately, the U.S. Justice Department has opened a
criminal investigation of possible manipulation in the foreign
exchange market, a person familiar with the matter said last
week. European Union antitrust regulators said on Oct. 7 they
were reviewing the market, while Switzerland’s Financial Market
Supervisory Authority, Finma, and the country’s competition
commission said this month they were also opening probes.

WM/Reuters Rates

The WM/Reuters rates are used by fund managers to determine
what they pay for currencies and to compute the day-to-day value
of their holdings, and by index providers such as FTSE Group and
MSCI Inc. that track stocks and bonds in multiple countries.
While the rates aren’t followed by most investors, even small
movements can affect the value of what Morningstar Inc.
estimates is $3.6 trillion in funds including pension and
savings accounts that track global indexes.

The rates are published hourly for 160 currencies and half-hourly for the 21 most-traded. They are the median of all trades
in a minute-long period starting 30 seconds before the beginning
of each half-hour. Rates for less-widely traded currencies are
based on quotes during a two-minute window.

The data are collected and distributed by World Markets
Co., a unit of Boston-based State Street Corp., and Thomson
Reuters Corp. Bloomberg LP, the parent company of Bloomberg
News, competes with Thomson Reuters in providing news and
information as well as currency-trading systems.